April 13, 2013
Saturday

Vic Fischer, a long time Alaskan, Anchorage city planner, and one of 55 citizens who drafted the Alaska constitution, released "To Russia with Love" in 2012. Vic's words on the struggles with the oil industry are especially pertinent as we face falling State revenues.

When it was discovered that Alaska held huge oil reserves, a science conference in 1969 predicted that "big oil would reach tentacles of control into Alaska's culture and government".(pg 294) Throughout the 1970s most members of the legislature shared the Alaska-centered perspective they held before the industry arrived. The debate centered on how much to charge the oil industry for Alaska's oil. The $900 million lease sale in Prudhoe Bay, "represented a fire-sale bargain" for the oil industry, according to Fischer.(pg 295). Alaska was selling a one-time asset and needed to earn "maximum benefit" for future generations.

As oil was about to flow, the legislature considered a tax and royalty system. However, "the oil industry cried foul with a series of bogus claims that it continues to use, despite the continuing failure of its repeated predictions that Alaska's taxes would stop investment". (pg 295)

As Fischer reports, "We were engaged in a commercial transaction with the world's richest companies. We needed to find the highest price the market would bear".(pg 295) There are two strategies that allow for the maximization of value: One is to sell it for its current value, the other strategy is to not sell. Oil that was left in the ground has been a great investment rising from $9 a barrel in the 1980s to $94 a barrel today.

Fischer's fair value is the point where the industry walks away from negotiations. Otherwise, "We are giving away resources that belong to Alaskan of the present and the future".

Unfortunately, our Governor and many in the legislature are willing to give in to the oil industry. We have lost our Alaskan centered path carved out by the Constitutional convention.

Victoria McDonald
Ketchikan, Alaska

About: "Moved to Alaska in 1974, taught school in Kake, Petersburg, Ketchikan, interested in state politics"

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